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Discount retailer B&M is paying its shareholders a £250m special dividend, after a boost in sales during lockdown almost doubled profits in the first half of the year.
The group, which sells everything from homeware and toys to electrical items and pet supplies, was among the essential retailers allowed to remain open during the UK-wide lockdown in the spring, when it proved popular with shoppers.
Its UK revenues rose by almost 30% in the six months to 26 September and pre-tax profits soared by 95%, to £296m, higher than it had forecast in September.
Simon Arora, B&M chief executive, said the firm’s business model proved “well-attuned to the evolving needs of customers”, even though it does not sell any products through its website.
B&M, which was elevated to the FTSE 100 index in September, benefitted from the location of its stores in out-of-town retail parks, which have attracted more shoppers than high streets or shopping centres during the pandemic.
“Our combination of everyday value across a broad range of product categories and convenient out-of-town locations has proved popular with shoppers,” Arora said.
The group’s decision to pay a special dividend of 25p per share on top of its ordinary dividend is likely to reignite criticism of shareholder payouts by retailers, who have received taxpayer support including a business rates holiday during Covid-19.
B&M said it had saved £35m through business rates relief, but that this was offset by increased costs of implementing social distancing in stores during the pandemic.
The group has repaid the £3.7m in support it had received from the UK government’s furlough scheme in the spring, and said it did not intend to access the scheme again. During the first half it created more than 1,800 jobs
“The company has clearly benefited from essential retailer status and has had a tailwind during lockdown,” said Greg Lawless, an equity analyst at stockbroker Shore Capital.
“B&M has, arguably, had the perfect calm compared to the storm faced by much of UK retail in 2020.”
The discount retailer, which has more than 600 stores in the UK, said it expects sales to slow as fresh lockdown restrictions ease, although they currently remain at a similar level to the spring.
Source: The Guardian
Keyword: Lockdown sales boost at B&M prompts £250m special dividend | Business